ASX Probe Highlights Risks in DroneShield’s Disclosure of Defence Contract Outcomes
DroneShield Limited has responded to ASX scrutiny over its disclosure of losing a $45.9 million Systems Integration Partner contract for Project LAND 156, denying the information was material to investors.
- ASX issued an aware letter questioning DroneShield's disclosure timing and materiality
- DroneShield lost the $45.9 million Project LAND 156 Systems Integration Partner tender
- DroneShield argues the contract value is immaterial relative to its $2.34 billion sales pipeline
- DroneShield admits mistakenly marking the announcement as price sensitive
- Company confirms compliance with ASX continuous disclosure rules and plans tighter disclosure controls
Background to the ASX Inquiry
On 2 September 2025, the Australian Securities Exchange (ASX) sent an aware letter to DroneShield Limited (ASX – DRO) following the company's announcement that it had not been selected as the Systems Integration Partner (SIP) for the Australian Department of Defence's Project LAND 156. The contract, awarded to Leidos Australia, is valued at approximately $45.9 million over three years.
The ASX's letter questioned whether this information was material and whether DroneShield had complied with its continuous disclosure obligations under Listing Rule 3.1, which requires immediate disclosure of information that a reasonable person would expect to have a material effect on the price or value of securities.
DroneShield's Response and Materiality Argument
The company also clarified that its earlier announcement on 24 July 2025, which disclosed a $5 million confirmed order under the initial LAND 156 contracts, was material due to its direct impact on revenue. In contrast, the 28 August announcement related to an unsuccessful tender and was incorrectly marked as price sensitive.
Disclosure Practices and Compliance Measures
DroneShield confirmed it became aware of the tender outcome via a confidential letter from the Department of Defence at noon on 27 August 2025. The company maintained that the information was confidential upon receipt and only became public shortly after through media reports. DroneShield affirmed compliance with ASX Listing Rules and its continuous disclosure policy.
To prevent future errors in marking announcements as price sensitive, DroneShield plans to implement quantitative materiality guidelines specifically for contract-related disclosures. This move aims to enhance clarity and ensure consistent compliance with ASX requirements.
Market Reaction and Implications
The announcement of the unsuccessful tender coincided with volatile trading in DroneShield shares on 27 August, including a notable price drop and increased volume shortly after the company became aware of the information. While DroneShield downplayed the materiality, the market's reaction suggests investors are sensitive to contract outcomes in the defence sector, especially for a company specializing in counter-drone technology.
Looking ahead, the scrutiny from ASX highlights the fine line companies must walk in balancing transparency with strategic confidentiality, particularly in competitive government contract environments.
Bottom Line?
DroneShield’s disclosure practices face fresh scrutiny, underscoring the stakes of transparency in defence contracting.
Questions in the middle?
- Will DroneShield’s new materiality guidelines prevent future disclosure missteps?
- How will the market respond to DroneShield’s broader sales pipeline versus individual contract wins or losses?
- Could ASX’s inquiry signal tighter regulatory oversight for defence sector disclosures?
